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Are Cryptocurrencies Like Bitcoin the Solution to the Music Industry’s Woes?
A few random artists get fortunate and make a living from their art, but most fight. Today, this problem is especially pronounced in music. SoundCloud, Spotify, Mixcloud, Pandora and all the other streaming services permanently tout the benefits they allegedly bestow on the music ecosystem. But in report after report, musicians say their income from such services is a fraction of what they once made from selling music on CDs and other physical formats.
As an artist attempting to make completes meet — I haven’t earned much from my music since the days when it was still pressed on vinyl — I set out to find a way to make more money from the digital distribution of my work. After a little online research, it became clear I was not alone in my dilemma. Various independent groups and organizations are attempting to solve this problem, as well as the music industry itself. Most have come up with the same basic solution: the blockchain.
When these people say “blockchain,” they usually mean something like Bitcoin — that electronic currency you could have bought but never did, each unit of which is now worth about $Two,400. Bitcoin is essentially based on the same digital technology that devastated the music industry in the early 2000s: peer-to-peer sharing. “P2P” networks such as the original Napster, BitTorrent and Pirate’s Bay all revolve around sharing networks where each computer’s files are made available to every other computer on the network, so that users of the P2P network can quickly get a file they want.
Around 2009, a mysterious, still unidentified person named Satoshi Nakamoto devised a way to make an online currency based on a peer-to-peer network. The units of value were called “Bitcoins” and their transactions were recorded in “blocks” of transactions, one after another, in sequential order. This became known as the very first “blockchain.” One of Bitcoin’s most significant innovations was that it did not depend on intermediaries such as banks or governments to support its existence; it simply required people with computers to permanently update the series of transactions. (For more of Bitcoin’s history, a good begin is the movie The Rise and Rise of Bitcoin.)
The process of validating Bitcoin transactions with one’s computer and receiving Bitcoins as a prize is called “mining.” The more transactions that occur, the firmer it is for computers to process the mathematics required to validate the transactions. The end result is that Bitcoin mining can no longer be done on a normal computer; it requires arrays of special central processing units to accomplish the task, sapping some of Bitcoin’s revolutionary, decentralized swagger. This led to the development of Bitcoin alternative coins (often called “alt-coins” or “cryptocurrencies”) that could only be mined with movie graphic cards that one might buy at Fry’s or Best Buy — which has led in latest months to a manic run on movie cards.
One of Bitcoin’s more unusual features, compared to traditional currencies, is that each “coin” can hold extra information. Think of it as metadata you might have on your computer files — such as how MP3s tell you the name of the artist and track title when you play them on your phone. This aspect of Bitcoin’s implementation on the blockchain is fairly basic, however, so many newer initiatives have aimed to expand the capabilities of this data-carrying capability of a blockchain. For example, you could make a contract with someone that is automatically paid out via the blockchain when certain conditions are met. This is known as a “clever contract.” The most well-known example of this functionality is the software platform Ethereum, whose coins are called “Ether” or “ETH.”
Brainy contracts are where blockchain technology has the potential to solve many of the music industry’s fattest issues with digital distribution — mainly, when it comes to how artists and rights holders get paid. Theoretically with blockchain technology, every time a song is streamed or downloaded, it would register and transmit a payment transaction that would go directly to the copyright possessor. Additionally, the copyright holder could program the song so that it would automatically issue payments to anyone else involved with the creation of the work. For example, a band could program its song so that every time it is streamed or downloaded, the blockchain will be notified to issue payments in predetermined percentages to the singer, guitarist, bassist, drummer, manager and label instantaneously.
Two major blockchain initiatives are aimed at the established music industry: the Open Music Initiative and Dot Blockchain Media.
The Open Music Initiative says, “We are creating an open-source protocol for the uniform identification of music rights holders and creators.” OMI has a lot of academic and industry members, from Sony Music Entertainment and the Harry Fox Agency to Spotify and MIT, helping to forward its development.
The Dot Blockchain Media initiative is based around promoting a fresh file format that would substitute the common music file types we know today: MP3, WAV and AIFF. The fresh file format would be identified with a “.bc” extension and would hard-code contractual and rights management data into the actual file when it is made. Whenever the .BC file is played, it conveys its information over the blockchain for any .BC-enabled device to recognize and distribute payments or other necessary data.
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On Dot Blockchain Media’s website, Benji Rogers, its founder and CEO, says, “Creators, rights holders and influencers who can digitally express their rights into their media will control their own destinies, whereas if we proceed to rely on the existing telegraph cable–like technology to attempt and track down ownership, usage, payments and rights as they surround our ’90s file types, then we will subject our creators only to the fads of these massive companies, their shareholders and business models, which are sometimes fundamentally at odds with the creators in the very first place.”
Here, Rogers succinctly sums up the rallying sob for virtually all the blockchain initiatives aimed at the music world. All of them, it would seem, want to help artists like me. But what strikes me as odd about this is when I take a look at the list of Dot Blockchain Media’s co-sponsors and interested parties, it’s the massive companies Rogers speaks of that are taking part in the advancement of the .BC protocol.
Not sure whether OMI and Dot Blockchain indeed had my best interests at heart, I dug deeper. Turns out there are myriad cryptocurrencies out there specifically targeting the music industry and its content creators: Audiocoin, Songcoin, Metal Music Coin, Bittunes, Ujo, Muse, Voise, Musicoin. Many, such as Audiocoin and Songcoin, are based on older blockchain technology that doesn’t support brainy contracts (tho’ Audiocoin is being revamped to do so). Others, like Bittunes and Muse, are still in development. The only one with a usable site that artists can upload their music to and the public can actually stream from is Musicoin. Based on a derivative of the Ethereum blockchain, it permits artists to split payments of Musicoins as they see fit so that every time their track is played, it pays out.